President of the African Development, Akinwumi Adesina, tells PUNCH about his career, economy, family and other issues
PUNCH
Do you think the Nigerian economy can cope or survive with the current exchange rate of over N1,500/dollar?
No, it cannot. The slide of the naira is because people are losing confidence in the economy. That is why I was saying that the way to deal with that is to see if we can expand the inflows of foreign exchange into the country. And hopefully, I just saw what the Governor of the Central Bank is doing in terms of the Monetary Policy Committee, as regards raising interest rate. I guess that will work, probably for the portfolio investors, but again, there are other consequences it could have in terms of investment in the critical sectors that you need to grow to be able to produce more and have the kind of export oriented-industrial manufacturing stance.
It is a balance between short-term solutions and long-term structural things that need to be done. I believe we need to deal with the short-term but keep the eye on the long-term structural things that must be done, and I will continue to maintain that. If you have an import-dependent economy, and you have a lot of forex like we used to have in abundance, and we were using that foreign exchange to shore up the naira, we are killing ourselves.
First, that way, you are making import much cheaper because of the overvalued exchange rate.
Second, you also have a situation that is killing the domestic economy, because the productions of other industries are negatively affected by that.
Third, the non-oil economy that you need to be much more performing requires revalued exchange rate, because they are not traded in dollars, but in domestic currency equivalent. That means if your currency was much more devalued but not collapsing, you would have had a lot more opportunity to be competitive in the export of other items. It is like a flood is coming and you are trying to use your hand to stop it. Eventually, the flood will carry you and your hand away. I think we need to take a very serious look at that.
Take the case of places like Netherlands for example. About a year or two ago, they were earning over $90bn a year from agricultural exports alone. Yet, how much land do they have? South Korea was earning about $230bn from exporting machinery and other electronics. We have top brains in this country. So, being competitive in the digital industry is important. Of course, we are doing well in the creative industry and others. We need to build those platforms that allow us to have that export-oriented manufacturing stance. I remember when I came to Nigeria a year or two ago, I gave a lecture to the Nigeria Manufacturers Association, and I remember they said that they liked the solutions I gave them and will like to turn it into a national policy.
